Incremental Oil and Gas reports 55pc jump in proven reserves
Incremental Oil and Gas is increasing production at its Wyoming oil field. Pic: IOG
Incremental Oil and Gas has reported a 55 per cent increase in proven oil and gas reserves at its new Wyoming oil field.
The proposed purchase of the Borie oilfield would add a good earner with plenty of production upside from the existing 60 barrels of oil per day, Incremental CEO John Whisler said from the company’s Denver head office.
That’s in addition to three undrilled well locations also recently identified with “proven” reserves economic at current oil prices.
Incremental follows a strategy of buying oil production cheaper than it can be drilled, then optimises for greater upside, including drilling new wells to increase cashflow and profit.
The US-focused onshore oil and gas play (ASX:IOG) recently reported the proposed acquisition of a 94 per cent stake in the Borie Field in the DJ Basin, Wyoming for around $1.125 million.
The field, which covers 2850 acres and 21 operated wells, now produces some 60 barrels of oil per day from 11 wells.
Discovered in the 1950s, Borie has produced around 5.5 million barrels of oil with wells drilled at various times between the 1950s and early 2000s.
Incremental acquired the project from a US-based private explorer and producer.
“The first thing we are going to do is optimise the wells and production systems,” Mr Whisler said.
“We will look to extract a further five to ten barrels per day out of that by either optimising those ones that are producing at the moment or bringing some of the shut-in wells back into production.”
Mr Whisler said Borie had three new undeveloped wells yet to be drilled which could potentially increase production to more than 200 barrels of oil per day from the new wells, taking company production to more than 700 barrels of oil equivalent per day.
“Oil and gas is a good, profitable business when run well, and we are carefully managing risk and identifying great opportunities to grow Incremental’s cashflow, assets and share price.”
Increase in reserves
Borie is already paying dividends with Incremental earlier this week reporting a 55 per cent jump in the company’s proven certified reserves to 2.1 million barrels of oil equivalent on finalising the Borie acquisition.
Its technical team completed a full evaluation of historic data and potential new well locations resulting in Borie adding 0.76 million barrels of oil to Incremental 1P Reserves category.
Incremental was continually evaluating other opportunities including new well prospects, Mr Whisler said.
“IOG has seen more good value opportunities in the past two months than we have seen in the past two years, so the timing is opportune,” he said.
Incremental believed the oil price would likely fetch $US60 per barrel in the next 12 months.
West Texas Intermediate Crude is now trading around $US52 per barrel and has been steadily climbing this month.
The company is undertaking a $2.17 million equity raising to fund the acquisition and working capital for further project development.
Incremental is trading at 1.7c and has a market capitalisation of $4.65 million with cash at bank of $US865,000 ($1.1 million) at the end of June.
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